Helping directors navigate sustainability

25 Oct 2018
SOURCE:
Robert Perry, Sustainable Leadership Manager

Sustainability is a critical issue that businesses must focus on at all levels. We’ve been hearing from many company directors who want to understand what sustainability means for their organisations and how they can bring it to the core of business strategy.

Last week with KPMG, we launched practical guidance to support directors and executives to better foresee and respond to the environmental, social and governance (ESG) challenges organisations face today.

The guidance will help directors and executive management to:

  • Assess the maturity of sustainability in their organisation, and identify critical steps for improvement.
  • Improve oversight of ESG risks and opportunities.
  • Embed sustainability into their organisation's purpose, core strategy and day-to-day decision-making.

The guidance was launched at a business leaders’ breakfast in Auckland, when we co-hosted 70 of New Zealand’s leading CEOs and directors. Attendees heard from keynote speaker Sir Jonathon Porritt (Founder of ‘Forum for the Future’) and directors Jane Taylor (Chair of NZ Post) and Rob Campbell (Chair of SKYCITY Entertainment).

The guidance was positively endorsed by Sir Jonathon, Jane and Rob who made the ‘need’ and ‘opportunity’ very clear.

Sir Jonathon reflected on how the traditional narrow definition of fiduciary duty is now broadening in response to the growing number of emerging sustainability risks that can affect company reputations and financial performance if left unaddressed.  This trend will be reinforced by Government’s proposals to implement the recommendations of the Task Force on Climate-related Financial Disclosures on climate-related risk through the Reserve Bank Act.

Jane and Rob echoed these observations, and said that sustainability is fundamental to their organisation’s success. To survive and grow, organisations must create value for the business and for society. Leading organisations are integrating sustainability into their business strategy to help them navigate new challenges and maximise the value they create for the organisation and society.

Finally there was lots of interest about how to structure sustainability oversight at a board level.  Should it be the responsibility of a dedicated committee or the responsibility of the entire board for example?  Abbie Reynolds, Executive Director, SBC observed that a growing number of organisations are establishing independent panels to advise executive management on sustainability issues.

As chair of Air New Zealand’s Sustainability Advisory Panel, Sir Jonathon highlighted the important role and responsibilities their panel has played in guiding and accelerating Air New Zealand’s sustainability ambitions and commitments.  This should be balanced with the significant commitment and resourcing that it can entail, so these panels may be more suited to organisations with complex issues and diverse stakeholders.  ‘No one size’ fits all.

Organisations such as Tourism Holdings Ltd, Sanford and Fonterra are already using the checklist to support meaningful conversations between board and management. The Panel strongly encouraged directors, executive management and sustainability leaders navigating the complexities of sustainability issues to use the guide and to reconvene in twelve months to check progress.

Download the guide Creating Sustainable Value from Good Governance

Robert Perry, Sustainable Leadership Manager